Office of Public Sector Information
PART 10 continued
(1) This section applies if a charitable trust’s non-charitable expenditure for a tax year exceeds its available income and gains for the tax year.
(2) The excess is the charitable trust’s “excess expenditure” for the tax year.
(3) The charitable trust’s excess expenditure for the tax year is treated for the purposes of this Part as non-charitable expenditure for earlier tax years so far as it can be attributed to earlier tax years under section 563.
(4) For the purposes of this Part a charitable trust’s “available income and gains” for a tax year is the sum of—
(a) the charitable trust’s total income for the tax year (ignoring any restrictions on the exemptions under this Part which result from sections 539(2) and 541),
(b) any chargeable gains accruing to the charitable trust in the tax year (ignoring any restriction on the exemption under section 256(1) of TCGA 1992 which results from section 256(4) of that Act),
(c) the charitable trust’s attributable income and gains for the tax year (see section 540), and
(d) any non-taxable sums received by the charitable trust in the tax year.
(5) In subsection (4) “non-taxable sums” means donations, legacies and other sums of a similar nature which, ignoring exemptions from income tax under this Part and from capital gains tax under section 256 of TCGA 1992, are not liable to income tax or capital gains tax.
(1) The rules in this section apply for attributing a charitable trust’s excess expenditure for a tax year to earlier tax years under section 562.
(2) The excess expenditure for a tax year may be attributed to an earlier tax year if—
(a) the earlier tax year ends not more than 6 years before the end of the tax year in question, and
(b) the charitable trust’s available income and gains for the earlier tax year exceed its non-charitable expenditure for the earlier tax year.
(3) If the conditions in subsection (2) are met in the case of more than one earlier tax year, the excess expenditure is to be attributed to a later tax year in priority to an earlier tax year.
(4) The amount of excess expenditure that is to be attributed to an earlier tax year must not be greater than the amount by which the charitable trust’s available income and gains for the earlier tax year exceed its non-charitable expenditure for the earlier tax year.
(5) For the purposes of subsections (2)(b) and (4) the charitable trust’s non-charitable expenditure for the earlier tax year includes any excess expenditure attributed to the earlier tax year as a result of a previous operation of this section, but ignores the attribution in question.
Such adjustments must be made (whether by way of the making of assessments or otherwise) as may be required in consequence of section 562.
(1) This Part is about the income tax treatment of some arrangements for the transfer of securities.
(2) Chapter 2 deals with arrangements for the transfer of securities under which provision is made for the payment of amounts representative of dividends or interest in respect of the securities.
(3) Chapter 3 prevents parties to stock lending arrangements (see section 568) and repos (see section 569) from being entitled to tax credits in some circumstances.
(4) Chapter 4 brings within the rules in Chapters 2 and 3—
(a) some stock lending arrangements under which the dividends or interest in respect of the transferred securities are paid to a person other than the lender, and
(b) some repos where the original owner is not entitled to the dividends or interest in respect of the transferred securities.
(5) Chapter 5 deals with differences between the sale and repurchase price under repos.
(6) Chapter 6 contains powers to modify some of the provisions about repos.
(1) This section applies for the purposes of this Part.
(2) “UK shares” means shares in a UK resident company.
(3) “UK securities” means securities of—
(a) the government of the United Kingdom,
(b) a local authority in the United Kingdom,
(c) another public authority in the United Kingdom, or
(d) a UK resident company or other UK resident body.
(4) But “UK securities” does not include UK shares.
(5) In this section “securities” includes loan stock or any similar security.
(1) This section applies for the purposes of this Part.
(2) “Overseas securities” means shares, stock or other securities issued by—
(a) a government, local authority or other public authority of a territory outside the United Kingdom, or
(b) another non-UK resident body of persons.
(3) “Overseas dividend” means any interest, dividend or other annual payment payable in respect of overseas securities.
(4) In this section “securities” includes loan stock or any similar security.
(1) For the purposes of this Part there is a stock lending arrangement in respect of securities if—
(a) a person (“the lender”) has transferred the securities to another person (“the borrower”) otherwise than by way of sale,
(b) the securities are UK shares, UK securities or overseas securities,
(c) the transfer is under an arrangement between the lender and the borrower, and
(d) under the arrangement, the borrower is required to transfer the securities back to the lender otherwise than by way of sale.
(2) The reference in subsection (1)(d) to the transfer of the securities back to the lender includes a reference to—
(a) a transfer within subsection (3), and
(b) a payment within subsection (5).
(3) A transfer is within this subsection if it is a transfer to the lender of securities of the same description as the securities—
(a) in accordance with a requirement to do so, or
(b) in exercise of a power to substitute securities of the same description for the securities that are required to be transferred back.
(4) For the purposes of subsection (3), securities are taken to be of the same description as other securities if (and only if) they—
(a) are in the same quantities,
(b) give the same rights against the same persons, and
(c) are of the same type and nominal value,
as the other securities.
(5) A payment is within this subsection if it is a payment to the lender, in pursuance of a redemption obligation, of an amount equal to the amount of the entitlement under the redemption obligation.
(6) A redemption obligation is an obligation that arises on a person’s becoming entitled to receive an amount in respect of the redemption of the securities.
(1) For the purposes of this Part there is a repo in respect of securities if conditions A, B and C are met.
(2) Condition A is that a person (“the original owner”) has agreed to sell the securities to another person (“the interim holder”).
(3) Condition B is that the securities are UK shares, UK securities or overseas securities.
(4) Condition C is that the original owner or a person connected with the original owner—
(a) is required to buy back the securities by the agreement or a related agreement,
(b) is required to buy back the securities as a result of the exercise of an option acquired under the agreement or a related agreement, or
(c) exercises an option to buy back the securities which was acquired under the agreement or a related agreement.
(1) This section applies for the purposes of this Part, in the context of a repo.
(2) References to buying back securities include references to—
(a) buying similar securities, and
(b) in the case of a person connected with the person who is the original owner under the repo, buying the securities sold by the original owner or similar securities.
(3) Subsection (2) applies even if the person buying the securities has not held them before.
(4) References to repurchase or a repurchaser are to be read accordingly.
(5) For the purposes of subsection (2) securities are similar if they give their holders—
(a) the same rights against the same persons as to capital and distributions, interest and dividends, and
(b) the same remedies to enforce those rights.
(6) Subsection (5) applies even if there is a difference in—
(a) the total nominal amounts of the securities,
(b) the form in which they are held, or
(c) the manner in which they can be transferred.
Agreements are related for the purposes of this Part if they are entered into in pursuance of the same arrangement (regardless of the date on which either agreement is entered into).
This Chapter is about the situation where a person—
(a) pays another person an amount which is representative of—
(i) dividends on UK shares,
(ii) periodical payments of interest on UK securities, or
(iii) overseas dividends on overseas securities, and
(b) does so under a requirement of an arrangement between them for the transfer of the UK shares, UK securities or overseas securities concerned.
(1) This section applies if a person—
(a) pays another person an amount (a “manufactured dividend”) which is representative of a dividend on UK shares, and
(b) does so under a requirement of an arrangement between them for the transfer of the shares.
(2) The Income Tax Acts apply in relation to the recipient, and persons claiming title through or under the recipient, as if the manufactured dividend were a dividend on the shares.
(3) If the payer is a UK resident company, the Income Tax Acts apply in relation to the payer as if the manufactured dividend were a dividend of the company.
(4) If the payer is UK resident and is not a company, the Income Tax Acts apply in relation to the payer subject to sections 574 and 575 (allowable deductions).
(5) This section is subject to—
(a) section 576 (manufactured dividends on UK shares: Real Estate Investment Trusts),
(b) section 583 (manufactured payments exceeding underlying payments), and
(c) section 585 (power to deal with other special cases).
(1) This section applies if a person who pays a manufactured dividend as mentioned in section 573(1) is UK resident and is not a company.
(2) An amount equal to the lesser of—
(a) the amount of the manufactured dividend, and
(b) the amount of the dividend of which the manufactured dividend is representative,
is allowable as a deduction for income tax purposes, subject to subsection (3).
(3) It is allowable only so far as—
(a) it is not otherwise deductible, and
(b) it falls within subsection (4) or (7).
(4) An amount falls within this subsection so far as the payer—
(a) receives either the dividend which is represented by the manufactured dividend or a payment which is representative of that dividend, and
(b) is chargeable to income tax on the dividend or payment received.
(5) An amount falls within subsection (4) only if the amount of the dividend or payment received is received by the payer in—
(a) the tax year in which the payer pays the manufactured dividend, or
(b) the tax year immediately before, or immediately after, that year.
(6) An amount which falls within subsection (4) is allowable as a deduction only from the amount of the dividend or payment received on which the payer is chargeable to income tax.
(7) An amount falls within this subsection so far as the payer—
(a) is treated under section 607 (treatment of price differences under repos) as receiving a payment of interest in respect of the shares, and
(b) is chargeable to income tax on the payment.
(8) An amount which falls within subsection (7) is allowable as a deduction in calculating the net income of the payer (see Step 2 of the calculation in section 23).
(9) See section 575 for a further qualification to the rule in subsection (2).
(10) For the purposes of subsection (3)(a) an amount is deductible if it is—
(a) deductible in calculating any of the payer’s profits or gains for income tax purposes, or
(b) deductible for those purposes in calculating the net income of the payer.
(1) This section applies if an amount has been allowed as a deduction under section 574(2) by reference to the whole or part of—
(a) the dividend or payment mentioned in section 574(4)(a), or
(b) the deemed payment of interest mentioned in section 574(7)(a).
(2) No further deduction is allowable by reference to all or part of the matched portion of the dividend, payment or deemed payment.
(3) The “matched portion” of the dividend, payment or deemed payment means—
(a) the whole of it, if the amount has been allowed as a deduction by reference to the whole of it, or
(b) the part of it by reference to which the amount has been allowed as a deduction, in any other case.
(1) This section applies (instead of section 573(2) and (3)) if—
(a) a person pays a manufactured dividend as mentioned in section 573(1), and
(b) the manufactured dividend is representative of a dividend which is—
(i) paid by a company to which Part 4 of FA 2006 applies (Real Estate Investment Trusts) in respect of profits of C (tax-exempt), or
(ii) paid by the principal company of a group to which that Part applies in respect of profits of G (property rental business).
(2) This section applies only so far as the manufactured dividend is representative of such a dividend.
(3) The Income Tax Acts apply in relation to the recipient, and persons claiming title through or under the recipient, as if the manufactured dividend were a dividend to which section 121 of FA 2006 applied (distributions treated as UK property business profits).
(4) This section is subject to—
(a) section 583 (manufactured payments exceeding underlying payments), and
(b) section 585 (power to deal with other special cases).
(1) Subsections (3) to (7) apply to a person who—
(a) pays a manufactured dividend as mentioned in section 573(1), and
(b) is not within the charge to corporation tax.
(2) But those subsections do not apply so far as the manufactured dividend is representative of a dividend which is—
(a) paid by a company to which Part 4 of FA 2006 applies (Real Estate Investment Trusts) in respect of profits of C (tax-exempt), or
(b) paid by the principal company of a group to which that Part applies in respect of profits of G (property rental business).
(3) The person must, at the same time as paying the manufactured dividend, give the recipient a statement.
(4) The statement must set out—
(a) the amount of the manufactured dividend,
(b) the date of its payment, and
(c) the amount of associated tax credit.
(5) The statement must be in writing.
(6) The amount of associated tax credit is the amount of tax credit to which the recipient, or a person claiming title through or under the recipient—
(a) is entitled in respect of the manufactured dividend as a result of section 573(2) of this Act or paragraph 2(3)(b) of Schedule 23A to ICTA (manufactured dividend treated as dividend), or
(b) would be so entitled if all the conditions for a tax credit had been met in the case of the deemed dividend and the recipient or that person.
(7) The duty under subsection (3) to give a statement is enforceable by the recipient.
(8) For provisions corresponding to subsections (3) to (7) which apply if the payer of a manufactured dividend is within the charge to corporation tax see—
(a) section 234A of ICTA (by virtue of paragraph 2(2)(b) of Schedule 23A to ICTA), if the payer is a UK resident company, and
(b) paragraph 2(6) to (8) of Schedule 23A to ICTA, if the payer is a non-UK resident company within the charge to corporation tax.
(9) For a power for regulations to make provision corresponding to subsections (3) to (7) for a case within subsection (2), see section 973 as applied by section 918(3) (and in particular section 974(1)(k)).
(1) This section applies if a person—
(a) pays another person an amount (“manufactured interest”) which is representative of a periodical payment of interest on UK securities, and
(b) does so under a requirement of an arrangement between them for the transfer of the securities.
(2) The Income Tax Acts apply in relation to the recipient, and persons claiming title through or under the recipient, as if—
(a) the manufactured interest were a periodical payment of interest on the securities, and
(b) the gross amount of the deemed interest payment were equal to the gross amount of the interest of which the manufactured interest is representative.
(3) If the payer is UK resident, or a person acting in the course of a trade carried on in the United Kingdom through a branch or agency, the Income Tax Acts apply in relation to the payer subject to sections 579 and 580 (allowable deductions).
(4) See also—
section 919 (manufactured interest payments by UK residents etc: deduction of income tax at source), and
section 920 (foreign payers of manufactured interest: the reverse charge).
(5) This section is subject to—
section 583 (manufactured payments exceeding underlying payments),
section 584 (manufactured payments less than underlying payments), and
section 585 (power to deal with other special cases).
(1) This section applies to a person who pays manufactured interest as mentioned in section 578(1).
(2) The gross amount of the manufactured interest is allowable for income tax purposes as a deduction in calculating the net income of the payer (see Step 2 of the calculation in section 23).
This is subject to subsection (3).
(3) It is allowable only so far as—
(a) it is not otherwise deductible, and
(b) it falls within subsection (4), (6) or (7).
(4) An amount falls within this subsection so far as the payer—
(a) receives either the periodical payment of interest which is represented by the manufactured interest or a payment which is representative of the periodical payment of interest, and
(b) is chargeable to income tax on the payment received.
(5) See section 679 (interest on securities involving accrued income losses: general) for the amount chargeable to income tax in a case where that section applies.
(6) An amount falls within this subsection so far as—
(a) the payer is, by virtue of Chapter 2 of Part 12 (accrued income profits), chargeable to income tax on qualifying accrued income profits in respect of transfers of securities, and
(b) the transfers are subject to the arrangement giving rise to the payment of manufactured interest.
(7) An amount falls within this subsection so far as the payer—
(a) is treated under section 607 (treatment of price differences under repos) as receiving a payment of interest in respect of the securities, and
(b) is chargeable to income tax on the payment.
(8) See section 580 for a further qualification to the rule in subsection (2).
(9) For the purposes of subsection (3)(a) an amount is deductible if it is—
(a) deductible in calculating any of the payer’s profits or gains for income tax purposes, or
(b) deductible for those purposes in calculating the net income of the payer.
(10) In this section “qualifying accrued income profits” means accrued income profits which are treated as made—
(a) under section 628(5), or
(b) under section 630(2) in respect of a transfer of variable rate securities.
(1) This section applies if an amount has been allowed as a deduction under section 579(2) by reference to the whole or part of—
(a) the periodical payment of interest, or other payment, mentioned in section 579(4)(a),
(b) the sum mentioned in section 579(6)(a), or
(c) the deemed payment of interest mentioned in section 579(7)(a).
(2) No further deduction is allowable by reference to all or part of the matched portion of the payment, sum or deemed payment.
(3) The “matched portion” of the payment, sum or deemed payment means—
(a) the whole of it, if the amount has been allowed as a deduction by reference to the whole of it, or
(b) the part of it by reference to which the amount has been allowed as a deduction, in any other case.
(1) This section applies if—
(a) a person (“the payer”) pays another person an amount (a “manufactured overseas dividend”) which is representative of an overseas dividend on overseas securities,
(b) the payer does so under a requirement of an arrangement between them for the transfer of the securities, and
(c) the condition in subsection (2) is met.
(2) The condition is that—
(a) in a case within section 922(1) (manufactured overseas dividends: payments by UK residents etc), the amount required to be deducted as a result of that section has been deducted, or
(b) in a case within section 923(1) (foreign payers of manufactured overseas dividends: the reverse charge), the amount of income tax required to be accounted for and paid as a result of that section has been accounted for and paid.
(3) Subsections (4) and (5) apply in relation to the recipient, and all persons claiming title through or under the recipient, for all relevant income tax purposes.
(4) The manufactured overseas dividend is treated as if it were—
(a) an overseas dividend of an amount equal to the gross amount of the manufactured overseas dividend, but
(b) paid after the withholding from it, on account of overseas tax, of the amount deducted as a result of section 922 or (as the case may be) accounted for and paid as a result of section 923.
(5) The amount deducted or accounted for and paid is accordingly to be treated as an amount withheld on account of overseas tax instead of as an amount on account of income tax.
(6) In this section “relevant income tax purposes” means the purposes of the Income Tax Acts as they apply in relation to—
(a) UK residents, and
(b) persons carrying on business through a branch or agency in the United Kingdom.
(1) The Treasury may by regulations make provision as mentioned in subsections (2) and (3) about prescribed cases where a person—
(a) pays or receives a manufactured overseas dividend as mentioned in section 581(1), or
(b) is treated as doing so for any purposes of this Chapter or regulations made under it.
(2) The regulations may provide for removing or reducing any right of the person to claim relief under Part 18 of ICTA (double taxation relief).
(3) The regulations may provide for adjusting a relevant amount by reference to a provision which has effect under the law of a territory outside the United Kingdom.
(4) A “relevant amount” is an amount which is treated for prescribed income tax purposes as the amount paid or payable to a person in respect of a relevant transaction.
(5) A “relevant transaction” is a sale, repurchase or other transfer of the overseas securities to which the manufactured overseas dividend relates.
Income Tax Act 2007